Pexa Group (ASX:PXA) is expected to face materially lower earnings after the Independent Pricing and Regulatory Tribunal (IPART) proposed a 20% cut to Australian Exchange transfer fees from fiscal 2028, prompting Jefferies to reduce its forecasts and valuation assumptions, the research firm said in a July 3 note.
The company said it will strongly oppose the draft proposal and push for any fee reductions to be phased in over four years in order to mitigate business impact, while IPART will accept stakeholder submissions until Aug. 14, hold a public hearing on July 21, and issue its final determination by the end of September.
Jefferies expects the proposed pricing changes to reduce Australian Exchange pricing by around 3.3% annually from fiscal 2028, lowering margins to 42% by fiscal 2033 from about 55%, though cost reductions from fiscal 2027 should partly offset the impact.
The research firm cut its forecasts for the company's UK business, citing uncertainty following the departure of UK chief executive Joe Pepper and the appointment of Krystle Kocik and Simon Wright as co-CEOs, effective July 1.
It also warned that weaker earnings in Australia could limit the company's flexibility in future capital allocation.
Jefferies lowered its fiscal 2028 and fiscal 2029 net profit after tax and amortization forecasts by 21% and 33%, respectively, while keeping its discounted cash flow valuation for the UK business unchanged.
Jefferies maintained its hold rating on Pexa Group while lowering its price target to AU$9.30 from AU$13.60.
Pexa Group's shares added 2% in recent Monday trade but earlier hit an all-time low.